The Reddit IPO is coming…can it live up to years of hype? | TechCrunch Minute

What is Reddit worth today we're Watching the market sort that out in Real time but there's a wrinkle worth Knowing so let's talk about it so Reddit Was founded back in 2005 it was sold to Kai Nast it was later spun out raised Capital at a 3 billion valuation back in 2019 by 2021 that had soared to a $10 Billion valuation though keep in mind That was the peak of the last venture Capital and startup bubble and now Finally the company is going public but It has been a long long long road to get Here the good news though is that all That patience has paid off because Reddit filed to go public back in February and that gave us a look at its Historical financial performance or in Nerd speak it gave us the numbers and What were they well Reddit had more than $800 million in Revenue last year However despite that massive figure it Was still unprofitable though it did Grow 21% in 2023 so it's certainly worth Quite a lot the only question is just How much so when a company goes public How is it valued well it drops its Numbers goes on a road show talks to a Lot of wealthy investors and comes to an Agreement with them about what it should Be worth then it sells a block of stock At that price and begins to trade and Voila a public company but what about Those investors how do they decide

What's a fair price to pay well they Often use similar companies as a point Of comparison or a public comp now a Public comp in the case of Reddit could Be snap another social media company That is unprofitable or if you want to Do stretch you could say it's similar to Meta although that company is much Larger and Incredibly profitable so Let's use snap when you compare reddit's Possible IPO valuation that it has shown Us thus far about $6 billion it looks a Little expensive compared to snap on a Revenue multiples basis so does that Make sense for Reddit to be worth more Per dollar of Revenue than snap which I'm sure you've also heard of the answer Is yes because it has an ace up its Sleeve and that Ace is well you guessed It it's AI is Reddit going to roll out a Fancy new chatbot to its user base well Maybe but the reason why we care about It right now is that data deals between Reddit and AI companies are proving to Be incredibly lucrative the company Signed more than $200 million worth of Them just so far this year and at least $67 million of that Revenue will land in 2024 so why do AI companies want to deal With Reddit and give it so much money Well words are the Grist for the AI Mill And no one has more words than Reddit so The Reddit IPO is fun it's a big moment For a tech company it's a social media

Success story it's a story brand finally Reaching the public markets but it's Also essentially an option on the Current AI boom if you are an investor With that in your line of sight so more We prices its IPO but I'll tell you this Reddit's IPO is going to be the debut of The first half of this year


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